The Effect of Merchandise Space Allocation on Retail Sales in Enclosed Shopping Centers

This research assesses the effect of merchandise space allocation on retail sales across 12 different merchandise categories in 65 enclosed shopping centers. To measure the effect of large specialty retailers on the sales of other retailers that carry similar merchandise we constructed a standardized measure of space allocation- the Index of Merchandise Space Allocation. Using this index, we measure the effect of merchandise space allocation on retail sales per square foot to determine if large specialty retailers are beneficial (increased sales per square foot) or detrimental (decreased sales per square foot) for similar merchandise type retailers. The findings reveal that for the seven of the twelve merchandise categories the existence of one or more large space occupiers positively and significantly affects sales per square foot. Generally speaking, large specialty retailers in regional shopping centers are complementary to, not competitive with, small retailers selling similar merchandise